United Kingdom

United Kingdom

Less dependent on government support

1 October 1996

Only two wind schemes are among the ten renewable energy projects signed up in Northern Ireland's latest round of renewables support (NI-NFFO-2). Wind developers are disappointed at not winning a larger slice of the cake. Some bid prices -- particularly for wind -- are now approaching current market prices for conventional generation indicating that NFFO subsidies are no longer needed. Also, Northern Ireland will soon have a "green tariff" enabling consumers to opt for electricity from renewable sources, providing a wind market outside the NFFO mechanism.

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Ten renewable energy projects have been signed up in Northern Ireland's latest round of renewables support -- but only two wind schemes are among them. Since 33 wind projects were submitted with some of the lowest bids, wind developers are disappointed they did not win a larger slice of the cake.

Northern Ireland Electricity (NIE) is contracting for a total of 16.271 MW under the province's second tranche of its non-fossil fuel obligation (NI-NFFO-2). The premium priced contracts have been awarded to biogas, waste, hydro, landfill gas, and biomass as well as the two wind schemes. The range of technologies is wider than in the first order -- NI-NFFO-1 -- when wind was particularly well represented. But the government did warn two years ago that the amount of wind power included in the order would be limited. Its aim this time round is to encourage more expensive technologies that still have some way to go before converging with the market price for electricity.

Four technologies new to Northern Ireland are included: waste incineration, landfill gas, biomass and biogas. In spite of this, the average price for renewable contracts of just over £0.04/kWh is one third lower than in the first order when prices averaged around £0.06/kWh. Contracts will run for 15 years within a 20 year window to allow time for development and commissioning.

The government's aim is for 45 MW of new renewable capacity in Northern Ireland by 2005. NIE claims that with the new contracts, over 30 MW of capacity -- or 2.5% of NIE's energy requirements -- will come from renewables. Under the first order in 1994, 20 contracts were awarded for 15.6 MW DNC. Out of the three technologies supported in NI-NFFO-1, wind has the best record of implementation. Five out of six wind contracts are generating with the sixth to come on line soon. Three hydro schemes are generating and the remaining six are due on stream by the end of the year, while none of the sewage gas contracts have yet been built.

Interest in the most recent order was keen: NIE received 79 final bids. The utility's supply director, Walter McClay, comments that the size of the order was higher than anticipated and would increase the NI NFFO's impact on overall costs of electricity generation. Against a background where Northern Ireland generation costs are already high compared with the rest of Great Britain (England, Scotland and Wales), any increase in the impact of NFFO prices on the customer was unwelcome, he complains. He acknowledges, though, that some bid prices -- particularly for wind -- are now approaching current market prices for conventional generation. "The recent downward trends in the price at which this type of renewable is bid indicate that NFFO subsidies are no longer needed," he argues.

McClay points out that from next year Northern Ireland is to have a "green tariff" enabling consumers to opt for electricity from renewable sources (Windpower Monthly, September 1996). This will provide a wind market outside the NFFO mechanism. He says the tariff could obviate the need for any future government NI NFFO order. Northern Ireland electricity regulator Douglas McIldoon has already indicated that wind projects that failed to secure NI NFFO contracts could yet be taken up under the green tariff.

The two successful wind developers (see box) are B9 Energy Services Ltd from Larne in County Antrim, and Renewable Energy Systems (RES) Ltd of England -- the wind development arm of the Sir Robert McAlpine construction group. B9's biomass business also won a NFFO contract. B9 Energy Biomass Ltd plans to build a 200 kW wood-burning CHP power station near Blackwater Valley Museum in Armagh. It will supply the museum with 200 kW of heat. The firm's David Surplus explains that initially the plant will burn sawmill residue, but after about four years it will be able to use the first commercial crop of short rotation coppiced willow. Northern Ireland's government departments of economic development and agriculture are keen to encourage the development of biomass in the province. But NIE points out that at twice the cost of other renewables, this technology is expensive.